Item 5 – Fees and Compensation
In return for services provided, each Client pays us a management fee (a percentage of
commitments and/or capital investments under management) and a performance-based carried
interest (a percentage of the net profits from divestment of portfolio holdings after capital is
returned and a preferred return, as described in Item 6, below). We may also receive directors’
fees, transaction fees, investment banking fees, advisory fees, monitoring fees, or similar fees, as
described below.
The Third Party Fund pays a fixed annual fee to SGD Capital LLC as compensation for Mr.
Schneider’s participation on the Third Party Fund’s investment committee.
Management Fees
Funds
The Funds pay us a management fee up to the amount specified in each Fund’s offering materials.
Through the end of a Fund’s “Investment Period,” this fee is typically in an amount equal to
approximately 2.0% of the aggregate capital commitment of the Fund’s investors. After the end
of the Investment Period (or upon such other events as may be specified in each Fund’s offering
materials), the fee is typically equal to 2.0% of invested capital. Our personnel and senior
management of Terranum S.A.S. and its affiliates do not pay management fees with respect to
their investments in the Funds. Certain of the Funds provide fee breaks for investors who
contribute in excess of a specified minimum investment specified in each Fund’s offering
materials.
The management fee is accrued and payable quarterly or semi-annually in advance. In the event
of an early termination of a Fund, we will return to the Fund the proportionate amount of the
management fee attributable to the period after the termination date. Management fees are not
negotiable.
Co-Investors
The Registrant is also entitled to receive a management fee from Co-Investors which are negotiated
with each Co-Investor and set forth in writing in the Co-Investment Agreements. The Registrant
may charge different management and performance fees to different client accounts.
Other Fees
We may also receive directors’ fees, transaction fees, investment banking fees, advisory fees,
monitoring fees, or similar fees in connection with consummated transactions or as compensation
for certain of our principals and employees serving as directors or advisors to portfolio companies
(collectively referred to below as “Other Fees”).
These Other Fees are determined on a transaction by transaction basis, and are generally calculated
based on the total enterprise, transaction or financing value of the portfolio company involved in
the transaction. To the extent these Other Fees are paid directly to us by companies owned by a
Fund and Co-Investors, they would effectively result in an indirect fee paid by the Fund and Co-
Investors. However, our management fees are offset by 100% of the Other Fees we receive, which
we believe aligns our interests with those of the Funds and Co-Investors.
An affiliate of ours may act as developer in certain portfolio investments, and receive project
related development fees from those portfolio investments in exchange for the development
services provided. The affiliate will share a certain percentage of its profits with the Fund which
has invested in the portfolio investment in accordance with a profit sharing schedule. Please see
Item 10 for more information about the affiliate.
Additional Expenses
The investment strategies we employ generally do not involve the purchase or sale of publicly
offered securities, and as such, do not typically entail expenses related to brokerage commissions,
although other expenses may arise. Please refer to Item 12 for additional information regarding
the factors we consider in selecting broker-dealers and other service providers for transactions,
and in determining the reasonableness of their compensation.
In addition, the investment strategies we employ may involve expenses paid by each of the Funds
and Co-Investors that are related to legal, tax, regulatory and other issues, as well as the costs of
other service providers and intermediaries, such as investment banks, that may be involved in the
purchase or divestment of each Fund’s or Co-Investor’s portfolio holdings.
Our fees are exclusive of these costs, as well as other transaction fees, custodial fees, organizational
costs, and other related costs and expenses, all of which are incurred by the Funds or Co-Investors
(either directly, or indirectly if the expenses are paid by the portfolio companies). In addition,
each Fund and Co-Investor also bear expenses of its own administrator(s) and certain other service
providers. We encourage you to review the offering materials and Co-Investor Agreements for
each Fund and Co-Investor which contain additional disclosures regarding expenses borne by it.
All expenses associated with any specific investment made will be allocated pro rata in accordance
with each Fund and Co-Investor's allocation of the investment opportunity, as applicable. In the
event that a co-investment is not consummated, any additional expenses not related to the Fund’s
allocation will be paid by us.
Related Matters:
Side Letters. We may negotiate specific terms of investment for certain prospective investors of
the Funds that will differ from the terms applicable to other investors. For example, such terms
may include priority co-investment rights and access to more detailed reports on the Funds.
Alternative Investment Vehicles. Sometimes certain Fund investors, for legal, regulatory, or tax
reasons, would be disadvantaged if an investment was made directly in a portfolio investment by
their Fund. In these circumstances, we may permit these investors to invest alongside each of the
Funds, on the same terms as each Fund, through an alternative investment vehicle (“AIV”). Fund
investors that invest through an AIV pay the same portion of fees and expenses as they would have
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